M/s. K. Venkata Raju Engineers & Contractiors, Vijayawada V. The Dy. CIT, Vijayawada

ITA 92/VIZ/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3851 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEBAKUMAR SONOWAL
• Assessee Lawyers: M MADHUSUDHAN
• Keywords: Depreciation; Opportunity of being heard; Set aside
• Section: 143(3)

Judgement Text

ITA NO.92 /VIZAG/2017 K. VENKATA RAJU, ENGINEERS & CONTRACTORS, VIJAYAWAD A 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . .. . . . . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.92/VIZAG/2017 ( / ASSESSMENT YEAR: 2010-11) K. VENKATA RAJU ENGINEERS & CONTRACTORS VIJAYAWADA THE DCIT, CIRCLE - 2(1), VIJAYAWADA [PAN NO. AAFFK1861Q ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI M. MADHUSUDHAN, AR / RESPONDENT BY : SHRI DEBA KUMAR SONOWAL, DR / DATE OF HEARING : 17.05.2018 / DATE OF PRONOUNCEMENT : 2 3.05.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), {CIT(A)}, VIJ AYAWADA VIDE ITA NO.336/CIT(A)/VJA/2015-16 DATED 28.10.2016 FOR THE ASSESSMENT YEAR 2010-11. ITA NO.92 /VIZAG/2017 K. VENKATA RAJU, ENGINEERS & CONTRACTORS, VIJAYAWAD A 2 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ORD ER PASSED BY THE CIT(A) AGAINST ORDER PASSED U/S 143(3) R.W.S. 263 O F THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT'). THE ASSESSEE IS A CIVIL CONTRACTOR FILED THE RETUR N OF INCOME ON 15.10.2010 DECLARING TOTAL INCOME OF ` 4,09,23,080/- AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON T OTAL INCOME OF ` 4,19,95,050/-. IN THE ASSESSMENT, THE ASSESSING OF FICER ESTIMATED THE INCOME @ 12.5% ON MAIN CONTRACTS AND 8% ON SUB CONT RACTS AND ALLOWED THE DEPRECIATION. SUBSEQUENTLY, THE COMMIS SIONER OF INCOME TAX(CIT), VIJAYAWADA HAS TAKEN UP THE CASE FOR REVI SION U/S 263 OF THE ACT AND VIEWED THAT THE A.O. HAVING ESTIMATED THE I NCOME WOULD NOT HAVE ALLOWED THE DEPRECIATION. THE LD.CIT OBSERVED THAT THOUGH THE A.O. RELIED ON THE DECISION IN THE CASE OF M/S. KNR CONSTRUCTIONS LIMITED, THE LATER DECISIONS OF ITAT, HYDERABAD IN THE CASE OF SRI P.V.SITARAMASWAMY .VS. ADDL.CIT, RANGE -8, HYDERABA D IN ITA NO.264/HYD/2012, DT,09/01/2013 SUPPORTS THE VIEW TH AT AO SHOULD NOT HAVE ALLOWED THE DEPRECIATION. ACCORDINGLY, THE LD . CIT DIRECTED THE A.O. TO ADD THE DEPRECIATION AND TO RE-DETERMINE TH E INCOME IN ACCORDANCE WITH LAW AND ESTABLISHED PROCEDURE AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE A. O. PASSED CONSEQUENTIAL ORDER DATED 21.01.2016 U/S 143(3) R.W .S. 263 OF THE ACT ITA NO.92 /VIZAG/2017 K. VENKATA RAJU, ENGINEERS & CONTRACTORS, VIJAYAWAD A 3 AND IN THE SAID ORDER AND COMPLETED THE RE-ASSESSME NT WITHOUT ALLOWING THE DEPRECIATION FROM THE ESTIMATED INCOME. THE AS SESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) DISMISS ED THE APPEAL OF THE ASSESSEE OBSERVING THAT THE CIT AND THE CIT(A) ARE PARALLEL AND EQUAL AUTHORITIES AND THE DECISION OF THE A.O. WAS ON THE BASIS OF SPECIFIC REMAND OF CIT, WHICH CANNOT BE SUBJECT MATTER OF AP PEAL BEFORE THE CIT(A) AND ACCORDINGLY, DISMISSED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US. DURING THE APPEAL HEARING, THE LD. A.R. SUBMITTED THAT THE LD. CIT THOUGH GIVEN SPECIFIC DIRECTION IN PARA NO. 4.4 OF THE ORDER U/S 263 TO ADD THE DEPRECIATION BUT IN THE SAME PARAGRA PH, IN CONCLUDING REMARKS THE LD. CIT HAS ALSO GIVEN DIRECTIONS TO TH E A.O. TO RE- DETERMINE THE TOTAL INCOME IN ACCORDANCE WITH LAW A ND ESTABLISHED PROCEDURE AND AFTER GIVING REASONABLE OPPORTUNITY T O THE ASSESSEE OF BEING HEARD. FURTHER, IN THE CONCLUDING PARAGRAPH I.E. PARAGRAPH NO.8.1 IN THE OPERATING PART OF THE ORDER, THE LD. CIT HAS CATEGORICALLY MENTIONED THAT THE ORDER PASSED U/S 143(3) OF THE A CT IS SET ASIDE WITH A DIRECTION TO RE-DO THE ASSESSMENT DE-NOVO IN ACCO RDANCE WITH LAW AND ESTABLISHED PROCEDURE AND AFTER GIVING REASONABLE O PPORTUNITY OF BEING ITA NO.92 /VIZAG/2017 K. VENKATA RAJU, ENGINEERS & CONTRACTORS, VIJAYAWAD A 4 HEARD TO THE ASSESSEE. THE OPERATING PARAGRAPH OF THE ORDER VERY CLEARLY SHOWS THAT THE ASSESSMENT IS SET ASIDE FOR DE-NOVO CONSIDERATION WHICH INDICATES THAT THE ASSESSMENT HAS TO BE START ED AFRESH AND ASSESSEE IS ENTITLE TO FILE APPEAL AGAINST THE CONS EQUENTIAL ORDER AND THE SAME WOULD FALL UNDER THE JURISDICTION OF THE LD.CI T(A). THE SPECIFIC DIRECTION GIVEN BY THE CIT IS NULLIFIED BY THE GENE RAL DIRECTION TO RE-DO THE ASSESSMENT DE-NOVO. THEREFORE, THE LD. A.R. AR GUED THAT THE LD. CIT(A) IS INCORRECT IN DISMISSING THE APPEAL STATIN G THAT THERE WAS A SPECIFIC DIRECTION OF THE CIT. IN FACT THE CIT HAS DIRECTED THE A.O. TO AFFORD REASONABLE OPPORTUNITY BEFORE PASSING THE OR DER, WHICH SHOWS THAT THERE WAS NO SPECIFIC REMAND FROM THE CIT, HEN CE, REQUESTED TO REMIT THE MATTER BACK TO THE FILE OF THE CIT(A) WIT H DIRECTION TO DECIDE THE ISSUE ON MERITS. 4. ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE OR DER OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE ITA NO.92 /VIZAG/2017 K. VENKATA RAJU, ENGINEERS & CONTRACTORS, VIJAYAWAD A 5 HAVE GONE THROUGH THE LD. CITS ORDER PASSED U/S 26 3 OF THE ACT. THE RELEVANT PART OF THE LD. CITS ORDER IN PARA 4.4. R EADS AS UNDER: THE A.O. IS DIRECTED TO ADD THE DEPRECIATION [WHIC H HE WRONGLY ALLOWED] AT ` 78,58,461/- TO THE TOTAL INCOME DETERMINED BY HIM AT ` 4,19,95,050/- IN HIS ORDER U/S 143(3) OF THE ACT DA TED 3.12.2012 AND RE- DETERMINE THE TOTAL INCOME IN ACCORDANCE WITH LAW & ESTABLISHED PROCEDURE AND AFTER AFFORDING A REASONABLE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. 6. SIMILARLY, CONCLUDING PARAGRAPH OF THE LD. CIT(A )S ORDER IN PARA 8.1 READS AS UNDER: IF WE APPLY THE ABOVE TESTS TO THE FACTS AND CIRCU MSTANCES OF THIS CASE, IT IS CLEAR THAT THE ASSESSMENT ORDER MADE BY THE A.O. U/S 143(3) OF THE ACT, DATED 3.12.2012 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICI AL TO THE INTERESTS OF REVENUE ON ALL THE ABOVE COUNTS AND HENCE IT IS SET ASIDE. SI NCE THE ISSUES INDICATED IN PARAS 4 TO 7, SUPRA, PRIMARILY AFFECT THE INCOME DETERMIN ATION, THE A.O. IS DIRECTED TO REDO THE ASSESSMENT, DENOVO, IN ACCORDANCE WITH LAW & ESTABLISHED PROCEDURE AND AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUN ITY OF BEING HEARD. 7. PLAIN READING OF PARAS 4.4 AND 8.1 OF LD. CITS ORDER, GIVES CONFUSION WITH REGARD TO THE DIRECTION GIVEN BY THE LD. CIT. IN PARA 4.4, THE CIT HAS DIRECTED THE A.O. TO ADD THE DEPRECIATI ON AND DIRECTED THE A.O. TO DETERMINE THE INCOME AS PER LAW AND ESTABLI SHED PROCEDURE AND AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE . IN THE CONCLUDING PARAGRAPH OF THE LD. CIT ORDER IN PARA NO.8.1, THE LD.CIT HAS SET ASIDE THE ASSESSMENT AND DIRECTED THE A.O. TO RE-DO THE A SSESSMENT AFRESH DE-NOVO, THEREFORE, COMBINED READING OF THE ENTIRE ORDER SHOWS THAT THE A.O. HAS TO BEGIN THE ASSESSMENT AFRESH, AND THE SP ECIFIC DIRECTION ITA NO.92 /VIZAG/2017 K. VENKATA RAJU, ENGINEERS & CONTRACTORS, VIJAYAWAD A 6 GIVEN BY THE CIT TO ADD THE DEPRECIATION IS NULLIFI ED BY GENERAL DIRECTION TO RE DO THE ASSESSMENT DE-NOVO. MERE FACT THAT TH E ASSESSMENT WAS SET ASIDE TO REDO DE-NOVO AFTER GIVING REASONABLE O PPORTUNITY SHOWS THAT THE ASSESSMENT HAS TO START FROM THE BEGINNING AND THE ASSESSEE IS ENTITLED TO ALL LEGAL REMEDIES INCLUDING THE APPEAL BEFORE THE CIT(A). ACCORDINGLY, THE ORDER PASSED U/S 143(3) R.W.S. 263 OF THE ACT HAS TO BE CONSIDERED AS FRESH ORDER OF ASSESSMENT AND THE LD. CIT(A) VESTS WITH THE JURISDICTION TO ADJUDICATE THE ISSUES RAISED I N THE CONSEQUENTIAL ORDER AFRESH ON MERITS. THE VIEW OF CIT(A) WITH RE GARD TO SPECIFIC DIRECTION FOR NON-ASSUMPTION OF JURISDICTION IS INC ORRECT WHEN THERE IS CONTRADICTORY DIRECTIONS ON THE SAME ISSUE. AS PER THE DECIDED CASE LAWS THE DIRECTION IS IN FAVOUR OF THE ASSESSEE HAS TO B E CONSIDERED AND BENEFIT OF DOUBT SHOULD BE ALLOWED TO THE ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE CIT WAS NOT INTE NDED TO GIVE ANY SPECIFIC DIRECTION AND THE DIRECTION WAS TO REMIT T HE MATTER BACK TO THE FILE OF THE A.O. TO RE-DO THE ASSESSMENT AFRESH DE- NOVO. ACCORDINGLY, WE HOLD THAT THE CIT(A) IS VESTED WITH THE JURISDIC TION AND DUTY BOUND TO DECIDE THE APPEAL OF THE ASSESSEE ON MERITS. HE NCE, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE LD. CIT(A) TO DECIDE THE APPEAL OF THE ASSESSEE AFRESH ON MERITS. THE ITA NO.92 /VIZAG/2017 K. VENKATA RAJU, ENGINEERS & CONTRACTORS, VIJAYAWAD A 7 ASSESSEE IS FREE TO TAKE UP ALL THE GROUNDS RELATIN G TO MERITS BEFORE THE CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 23 RD MAY18. SD/- SD/- ( . ) ( . .. . . . . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 23.05.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT M/S. K. VENKATA RAJU, ENGINEERS & CONTRACTORS, D.NO.54-20-6, KANAKADURGA GAZETTED OFFICERS COLONY, ROAD NO.1, GURUNANAK NAGAR, VIJAYAWADA-520 008. 2. / THE RESPONDENT THE DCIT, CIRCLE-2(1), VIJAYAWA DA 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM